The price of gold remains above the threshold of $5,000 per ounce. In the early hours of March 18, gold traded at around $5,009, with a marginal change of 0.08%, a sign of stabilization at historically high levels.
Beyond the daily movement of the precious metal, the maintenance of the price of gold above this threshold represents a key indicator of the financial climate: gold, traditionally a safe haven, continues to benefit from a context dominated by uncertainty and volatility. And fear.
Gold and central banks
After opening with a sprint, gold fell to reach $4,992 an ounce around 10:00 am. A physiological drop, partly explained by profit taking. However, it remains the sign of a solid opening which sees gold as the king of safe haven assets.
Investors’ attention is now focused above all on the decisions of the Federal Reserve and the European Central Bank. The market expects a pause on rates, but what really matters will be future indications.
High rates normally tend to penalize gold, which sees its yield shrink. But at this stage the yellow metal continues to hold up thanks to the weight of geopolitical variables: the war in Iran and the uncertainty over the Strait of Hormuz, which are added to Trump’s threats to Latin America (Cuba) and the now long-standing war in Ukraine.
The war in Iran remains one of the main sources of pressure, with tensions in the area and shocks in the markets fueling demand for defensive assets, pushing investors to reduce risk exposure.
The movements observed on the stock exchanges confirm the trend: on the one hand energy and utility stocks show weakness while on the other hand gold consolidates its role as a hedge against external shocks.
Today, gold is no longer just a protection against inflation, as in peacetime, but is a structural component of portfolios.
In parallel, European stock markets show a wait-and-see attitude, with sector rotations and focus on the next macroeconomic signals. In this context, the price of gold becomes a sort of “fear thermometer”.
How far gold can rise, the hypotheses
Some analysts hypothesize further margins for growth, with targets even above $6,000 in the event of a prolongation of global tensions and less restrictive monetary policies.
Much will depend on three key factors:
- evolution of the conflict in the Middle East;
- central bank decisions;
- global inflation trend.
Price of gold quadrupled in ten years
Confartigianato Firenze highlights that in 2016 gold was worth around 36 euros per gram, while today it is close to 150 euros: the cost of gold has essentially more than quadrupled. And silver also went from around 0.44 euros per gram to over 2.5 euros.
The newspaper The Nation collected the comment of Jacopo Ferretti, general secretary of Confartigianato Imprese Firenze:
The price of gold and silver has risen rapidly and artisans are having to reorganize their work to manage much higher costs.
This is what Bianca Guscelli of the historic silverware Brandimarte comments:
More and more people come in to sell objects, convinced that the value is only in the weight. But behind it there is manufacturing, design, quality, and this is what makes our work unique. A handcrafted object is not just raw material but the result of skills, experience and tradition. And this is what continues to make the work of our workshops unique and recognizable over time.
